Starting a new business isn’t exactly a walk in the park. It’s a leap of faith that requires a lot of hardwork and determination. One of the questions aspiring business owners must answer is the sector to start a business in.
Sectors like blockchain, artificial intelligence, and cannabis are relatively new having been around for just a few years. And with the huge potential of these emerging industries, starting a business in any of them seems to be a no-brainer. Cannabis and blockchain have already shown immense growth with investors and entrepreneurs making insane money (millions and even billions of dollars) in a very short timeframe.
It’s not all rainbow and sunshine with these new sectors as they are a few obstacles to overcome. Such obstacles include regulatory problems, hurdles from established businesses in the sectors, several failed startups, and so on.
But if you are not afraid to take on challenges, there are several benefits emerging industries have over traditional ones. It doesn’t matter whether you are a new or experienced entrepreneur. Where there is will, there is a way. Below are reasons why you should seriously consider setting up shop in a new market:
Get an early start
One of the priceless benefits of starting a business in emerging industries is the opportunity to be among the early birds, the very first people to enter the industry. And as the industry grows, the early birds are among those that benefit most. There is the potentially hefty financial reward and the opportunity to impact several people positively.
As mentioned earlier, there will be challenges to overcome when entering a new sector. And this is where you have to show your true character as an entrepreneur and take on these challenges.
Inadequate skilled labor is one of the problems of new markets and a way to overcome this is to use a reputable global PEO company. Other potential obstacles include regulatory challenges and lack of ready made solutions for some or most of the business operations.
The early birds in the blockchain industry can testify to the benefits of entering high-potential emerging sectors at an early age. With the blockchain sector becoming a $3 billion industry and with lots of room for more growth in the future, early birds like Coinbase and Canaan Creative have seen their values skyrocket to over $1 billion. Of course, both companies had to be innovative (will be discussed in the next subheading) and found solutions to problems which include the banning of cryptocurrency adverts, regulations against the blockchain industry, and so on.
Be an innovator
Innovation is key to the success of any business in a new sector. There aren’t any standards yet and every startup in the sector is looking to improve their brand’s recognition and profitability. And the way to achieve this is through innovation.
This is in contrast to traditional industries where standards have already been established and creativity and inventiveness have declined over time. The focus of businesses in such industries will be to ensure stable growth and profits.
The best innovators in emerging industries have the highest chance of succeeding as they will be responsible for coming up with new products, business models, and opportunities. It’s also their vision that will help create tools and infrastructure needed for the growth of the sector. And innovations are rewarded through patents on highly sought-after Intellectual Properties (IP), Software-as-a-Service (SaaS) solutions, and so on.
Valve Software transitioned into the digital game download space for games through Steam and the innovation of the company has shaped the industry today. Steam accounts for about 75% of all PC game downloads. That’s…a lot.
Get to expand your customer base
While the potential benefits of a new industry are sure to entice many entrepreneurs, it doesn’t change the fact that new businesses are usually capital intensive and full of risks. A new entrepreneur will have to take these risks.
Some entrepreneurs attempt to mitigate risks by expanding their products and services to new regional markets in a bid to expand their customer base. The hope is to have new products and services that better align with the new market.
As you may suspect, it’s not easy to expand your products and services into a new region. The most obvious obstacle is cost. Expanding into a new region can cost businesses a lot of money. There are also the unfamiliar and even complicated regulations and societal norms that must be adhered to if business is to thrive in the new region.
New regions mean new employees and managing several employees and payrolls across multiple regions can turn out to be a bit difficult. But there’s light at the end of the tunnels as there are ready-made solutions that can simplify or lessen the burden of going international.
Antoine Boquen of the New Horizons Global Partners is no stranger to the challenges of expanding into new regions and offers the following advice.
“International businesses looking to expand into foreign markets can grow their revenue and customer base dramatically by tapping into local culture, trends and by filling unmet needs in regional markets,” he says. “But doing so is a challenging endeavor, so firms might be best served by hiring an international expansion consultant and professional employer organization (PEO) to help ease the burden.”
Expanding to new regions is especially beneficial if the current region(s) are becoming saturated and the business can tap into a new customer base, local talents, and resources to have an edge over its competitors.